SlideShare a Scribd company logo
An Introduction to SaaS Metrics & Churn:
The Secret to Subscription Success
chartmogul.com
© 2015 Chartmogul Ltd
We’re a SaaS business too.
Here’s how we measure ourselves and
update our investors
Marketing
Funnel
Inside
Sales
SaaS
Revenue
Metrics
Financials
© 2015 Chartmogul Ltd
KPIs We Care About (and you should too)
Customers
Monthly Recurring Revenue (MRR)
Annual Recurring Revenue (ARR)
Average Revenue Per Account (ARPA)
MRR/Customer churn rate
Customer Lifetime Value (LTV)
Customer acquisition cost (CAC)
© 2015 Chartmogul Ltd
SaaS Revenue Metrics:
• Differ from traditional accounting in that they
are mostly interpreted forward projections
• Don’t make standard financial reporting
(gross/net revenue, etc) any less relevant
• Are more relevant to the management team
on a day-to-day basis.
© 2015 Chartmogul Ltd
Monthly Recurring Revenue (MRR)
MRR is the backbone of any subscription business.
“The amount of revenue you would generate next month if all customers are paying
monthly and you had no new customers, cancellations, upgrade or downgrades.”
© 2015 Chartmogul Ltd
Breaking Down MRR Into “Movements”
New business MRR - A lead that converts into a paid customer
Expansion MRR - Any increase in the MRR of an existing customer
Contraction MRR - Any decrease in MRR of an existing customer
Churn MRR - Decreases in MRR from customer cancellations
Reactivation MRR - Previously churned customers resubscribing
© 2015 Chartmogul Ltd
Customer Churn Rate (B2B)
What is it?
The rate at which you are losing customers through subscription
cancellations.
Calculation
Segmentation is key to getting meaningful Churn metrics.
© 2015 Chartmogul Ltd
MRR Churn Rate (B2B)
What is it?
The rate at which you are losing revenue through subscription
cancellations.
Calculation
Segmentation is key to getting meaningful Churn metrics.
© 2015 Chartmogul Ltd
Positive Churn vs. Negative Churn
Many of the best known public SaaS companies have negative churn, e.g.
New Relic, Zendesk, but not a requirement to be a unicorn, e.g. HubSpot.
Image credits to Tomasz Tunguz
:( :D
© 2015 Chartmogul Ltd
Churn Rate (B2C)
A B2C formula
Devin Brady (Recurly) wrote about a better way to calculate churn
which we think is more useful for B2C companies (e.g. Netflix)
Calculation
Iterating through each day in the selected period (e.g. month/
quarter) we calculate as follows:
SUM(1 - #_active_customers_at_end_of_day /
#_active_customers_at_the_start_of_day)
© 2015 Chartmogul Ltd
Churn Recognition
Best practice is to recognise churn at the end of the paid up billing
period.
© 2015 Chartmogul Ltd
Churn classification
Pro-active churn - Customer chose to cancel
Passive churn - Customer didn’t update credit card
Happy churn - Finished using your product (subset of pro-active churn)
Churn that isn’t really churn - Money-back guarantees, etc.
What is a reasonable level of Churn?
Most SaaS companies selling to SMBs have quite high monthly churn (3-5%)
The more up-market you go the lower the churn rate (usually)
Many public SaaS companies have negative net churn, as high as 20%
© 2015 Chartmogul Ltd
Cohort Analysis - Identifying “Risky” Months
Cohort analysis is the best way to truly understand how your
subscriptions evolve over their lifespan.
CustomerCohorts
Months Since Signup
© 2015 Chartmogul Ltd
Customer Lifetime Value (LTV)
What is it?
An estimate of the total subscription value of an average customer.
Calculation
Helps with decisions on CAC spending, growth predictions.
ARPA
Customer churn
LTV =
© 2015 Chartmogul Ltd
Customer Lifetime Value (LTV)
This simple formula is a good starting point, but it doesn't take
into account two important factors:

1. Churn doesn't occur linearly















2. Many companies experience significant account expansion
following an initial purchase.
The blue line results
in 10% less revenue
over the same period.
© 2015 Chartmogul Ltd
Customer Lifetime Value (LTV)
A Modular LTV Formula
© 2015 Chartmogul Ltd
Learn more from the leaders in SaaS thinking…
Jason M. Lemkin
@jasonlk
saastr.com
Christoph Janz
@chrija
theangelvc.net
David Skok
@BostonVC
forentrepreneurs.com
Tomasz Tunguz
@ttunguz
tomtunguz.com
+
chartmogul.com/blog
© 2015 Chartmogul Ltd
ChartMogul Loves SaaS Metrics
The ChartMogul SaaS Cheat Sheet Trilogy
© 2015 Chartmogul Ltd
An Analysis of B2B SaaS
Pricing Pages
© 2015 Chartmogul Ltd
Webinar – April 29, 2015
An Analysis of B2B SaaS
Pricing Pages
Even More Resources(!)
• A Better Way to Calculate your Churn Rate

• Ultimate SaaS Metrics Cheat Sheet

• Ultimate Churn Metrics Cheat Sheet

• Ultimate Cohort Analysis Cheat Sheet

• Ultimate Guide to SaaS Customer Lifetime Value (LTV)

• Why SaaS startups should aim for negative MRR churn
© 2015 Chartmogul Ltd
Thank you.
@chartmogul
support@chartmogul.com
© 2015 Chartmogul Ltd

More Related Content

What's hot

A High Growth SaaS Playbook - 12 Metrics to Drive Success
A High Growth SaaS Playbook - 12 Metrics to Drive SuccessA High Growth SaaS Playbook - 12 Metrics to Drive Success
A High Growth SaaS Playbook - 12 Metrics to Drive Success
SaaStock
 
Drive Growth With An ABX GTM Strategy
Drive Growth With An ABX GTM StrategyDrive Growth With An ABX GTM Strategy
Drive Growth With An ABX GTM Strategy
Demandbase
 
Get inside your Buyers Head - Improve Funnel Conversion Rates
Get inside your Buyers Head - Improve Funnel Conversion RatesGet inside your Buyers Head - Improve Funnel Conversion Rates
Get inside your Buyers Head - Improve Funnel Conversion Rates
David Skok
 
KPIs for SaaS Startups
KPIs for SaaS StartupsKPIs for SaaS Startups
KPIs for SaaS Startups
Nick Franklin
 
Building a Repeatable, Scalable & Profitable Growth Process
Building a Repeatable, Scalable & Profitable Growth ProcessBuilding a Repeatable, Scalable & Profitable Growth Process
Building a Repeatable, Scalable & Profitable Growth Process
David Skok
 
B2B Sales of the Future  
B2B Sales of the Future  B2B Sales of the Future  
B2B Sales of the Future  
accenture
 
SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...
SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...
SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...
saastr
 
Sales, Sales Management, Sales Strategy
Sales, Sales Management, Sales StrategySales, Sales Management, Sales Strategy
Sales, Sales Management, Sales Strategy
Brian Halligan
 
Customer Acquisition Cost and Lifetime Value (CAC & LTV)
Customer Acquisition Cost and Lifetime Value (CAC & LTV)Customer Acquisition Cost and Lifetime Value (CAC & LTV)
Customer Acquisition Cost and Lifetime Value (CAC & LTV)
Sarah Wilz, M.Ed
 
Presentation on Customer Lifetime Value
Presentation on Customer Lifetime ValuePresentation on Customer Lifetime Value
Presentation on Customer Lifetime Value
Kisorkumar Varadarajan
 
The Key Drivers for SaaS Success
The Key Drivers for SaaS SuccessThe Key Drivers for SaaS Success
The Key Drivers for SaaS Success
David Skok
 
B2B Sales Prospecting Methods
B2B Sales Prospecting MethodsB2B Sales Prospecting Methods
B2B Sales Prospecting Methods
Andriy Popov
 
The Next Wave in Sales & Marketing
The Next Wave in Sales & MarketingThe Next Wave in Sales & Marketing
The Next Wave in Sales & Marketing
Drift
 
Lead Generation Campaign
Lead Generation CampaignLead Generation Campaign
Lead Generation Campaign
thbanna
 
Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...
Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...
Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...
Go To Market Consulting LLC
 
Account Planning Template for Account-Based Marketing
Account Planning Template for Account-Based MarketingAccount Planning Template for Account-Based Marketing
Account Planning Template for Account-Based Marketing
Chris Louie
 
Digital Marketing Plan Template
Digital Marketing Plan TemplateDigital Marketing Plan Template
Digital Marketing Plan Template
C.Y Wong
 
WebSummit 2018 - The SaaS Business Model & Metrics
WebSummit 2018 - The SaaS Business Model & MetricsWebSummit 2018 - The SaaS Business Model & Metrics
WebSummit 2018 - The SaaS Business Model & Metrics
David Skok
 
Zero to 100 - Part 5: SaaS Business Model & Metrics
Zero to 100 - Part 5: SaaS Business Model & MetricsZero to 100 - Part 5: SaaS Business Model & Metrics
Zero to 100 - Part 5: SaaS Business Model & Metrics
David Skok
 
SaaS Metrics - Bulletproof your SaaS Growth
SaaS Metrics - Bulletproof your SaaS GrowthSaaS Metrics - Bulletproof your SaaS Growth
SaaS Metrics - Bulletproof your SaaS Growth
Anadi Raj Tiwari
 

What's hot (20)

A High Growth SaaS Playbook - 12 Metrics to Drive Success
A High Growth SaaS Playbook - 12 Metrics to Drive SuccessA High Growth SaaS Playbook - 12 Metrics to Drive Success
A High Growth SaaS Playbook - 12 Metrics to Drive Success
 
Drive Growth With An ABX GTM Strategy
Drive Growth With An ABX GTM StrategyDrive Growth With An ABX GTM Strategy
Drive Growth With An ABX GTM Strategy
 
Get inside your Buyers Head - Improve Funnel Conversion Rates
Get inside your Buyers Head - Improve Funnel Conversion RatesGet inside your Buyers Head - Improve Funnel Conversion Rates
Get inside your Buyers Head - Improve Funnel Conversion Rates
 
KPIs for SaaS Startups
KPIs for SaaS StartupsKPIs for SaaS Startups
KPIs for SaaS Startups
 
Building a Repeatable, Scalable & Profitable Growth Process
Building a Repeatable, Scalable & Profitable Growth ProcessBuilding a Repeatable, Scalable & Profitable Growth Process
Building a Repeatable, Scalable & Profitable Growth Process
 
B2B Sales of the Future  
B2B Sales of the Future  B2B Sales of the Future  
B2B Sales of the Future  
 
SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...
SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...
SaaS Metrics Masterclass: What Key Business Metrics, Pricing Strategies, and ...
 
Sales, Sales Management, Sales Strategy
Sales, Sales Management, Sales StrategySales, Sales Management, Sales Strategy
Sales, Sales Management, Sales Strategy
 
Customer Acquisition Cost and Lifetime Value (CAC & LTV)
Customer Acquisition Cost and Lifetime Value (CAC & LTV)Customer Acquisition Cost and Lifetime Value (CAC & LTV)
Customer Acquisition Cost and Lifetime Value (CAC & LTV)
 
Presentation on Customer Lifetime Value
Presentation on Customer Lifetime ValuePresentation on Customer Lifetime Value
Presentation on Customer Lifetime Value
 
The Key Drivers for SaaS Success
The Key Drivers for SaaS SuccessThe Key Drivers for SaaS Success
The Key Drivers for SaaS Success
 
B2B Sales Prospecting Methods
B2B Sales Prospecting MethodsB2B Sales Prospecting Methods
B2B Sales Prospecting Methods
 
The Next Wave in Sales & Marketing
The Next Wave in Sales & MarketingThe Next Wave in Sales & Marketing
The Next Wave in Sales & Marketing
 
Lead Generation Campaign
Lead Generation CampaignLead Generation Campaign
Lead Generation Campaign
 
Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...
Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...
Go To Market Strategy - How To Create Profit Generating Sales & Marketing Str...
 
Account Planning Template for Account-Based Marketing
Account Planning Template for Account-Based MarketingAccount Planning Template for Account-Based Marketing
Account Planning Template for Account-Based Marketing
 
Digital Marketing Plan Template
Digital Marketing Plan TemplateDigital Marketing Plan Template
Digital Marketing Plan Template
 
WebSummit 2018 - The SaaS Business Model & Metrics
WebSummit 2018 - The SaaS Business Model & MetricsWebSummit 2018 - The SaaS Business Model & Metrics
WebSummit 2018 - The SaaS Business Model & Metrics
 
Zero to 100 - Part 5: SaaS Business Model & Metrics
Zero to 100 - Part 5: SaaS Business Model & MetricsZero to 100 - Part 5: SaaS Business Model & Metrics
Zero to 100 - Part 5: SaaS Business Model & Metrics
 
SaaS Metrics - Bulletproof your SaaS Growth
SaaS Metrics - Bulletproof your SaaS GrowthSaaS Metrics - Bulletproof your SaaS Growth
SaaS Metrics - Bulletproof your SaaS Growth
 

Viewers also liked

Benchmarking Exceptional Series A SaaS Companies
Benchmarking Exceptional Series A SaaS CompaniesBenchmarking Exceptional Series A SaaS Companies
Benchmarking Exceptional Series A SaaS Companies
Tomasz Tunguz
 
The Rise of All-In-One SaaS
The Rise of All-In-One SaaSThe Rise of All-In-One SaaS
The Rise of All-In-One SaaS
Hiten Shah
 
2016 SaaS Metrics Report
2016 SaaS Metrics Report2016 SaaS Metrics Report
2016 SaaS Metrics Report
Totango
 
Strategic Marketing & Sales Plan Template
Strategic Marketing & Sales Plan TemplateStrategic Marketing & Sales Plan Template
Strategic Marketing & Sales Plan Template
Flevy.com Best Practices
 
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell Itself
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell ItselfSaaS Marketing Plan: 5 Ways to Get your B2B App to Sell Itself
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell Itself
Lincoln Murphy
 
Go to-market strategy for B2B SaaS companies
Go to-market strategy for B2B SaaS companiesGo to-market strategy for B2B SaaS companies
Go to-market strategy for B2B SaaS companies
Guillaume Lerouge
 
The Top Skills That Can Get You Hired in 2017
The Top Skills That Can Get You Hired in 2017The Top Skills That Can Get You Hired in 2017
The Top Skills That Can Get You Hired in 2017
LinkedIn
 

Viewers also liked (7)

Benchmarking Exceptional Series A SaaS Companies
Benchmarking Exceptional Series A SaaS CompaniesBenchmarking Exceptional Series A SaaS Companies
Benchmarking Exceptional Series A SaaS Companies
 
The Rise of All-In-One SaaS
The Rise of All-In-One SaaSThe Rise of All-In-One SaaS
The Rise of All-In-One SaaS
 
2016 SaaS Metrics Report
2016 SaaS Metrics Report2016 SaaS Metrics Report
2016 SaaS Metrics Report
 
Strategic Marketing & Sales Plan Template
Strategic Marketing & Sales Plan TemplateStrategic Marketing & Sales Plan Template
Strategic Marketing & Sales Plan Template
 
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell Itself
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell ItselfSaaS Marketing Plan: 5 Ways to Get your B2B App to Sell Itself
SaaS Marketing Plan: 5 Ways to Get your B2B App to Sell Itself
 
Go to-market strategy for B2B SaaS companies
Go to-market strategy for B2B SaaS companiesGo to-market strategy for B2B SaaS companies
Go to-market strategy for B2B SaaS companies
 
The Top Skills That Can Get You Hired in 2017
The Top Skills That Can Get You Hired in 2017The Top Skills That Can Get You Hired in 2017
The Top Skills That Can Get You Hired in 2017
 

Similar to SaaS Metrics: The Secret to Subscription Success

Customer Retention Cost Report
Customer Retention Cost ReportCustomer Retention Cost Report
Customer Retention Cost Report
Totango
 
How to create and measure a recurring revenue business
How to create and measure a recurring revenue businessHow to create and measure a recurring revenue business
How to create and measure a recurring revenue business
Leandro Faria
 
Calculating Customer Lifetime Value How-To Guide
Calculating Customer Lifetime Value How-To GuideCalculating Customer Lifetime Value How-To Guide
Calculating Customer Lifetime Value How-To Guide
Demand Metric
 
SaaS Metrics for Startups
SaaS Metrics for StartupsSaaS Metrics for Startups
SaaS Metrics for Startups
ecobold
 
Account Planning in Salesforce: Trending in 2015
Account Planning in Salesforce:  Trending in 2015 Account Planning in Salesforce:  Trending in 2015
Account Planning in Salesforce: Trending in 2015
Altify
 
The key SaaS metrics that matter to smb owners
The key SaaS metrics that matter to smb ownersThe key SaaS metrics that matter to smb owners
The key SaaS metrics that matter to smb owners
Lighter Capital
 
How to guide - calculating clv (sample)
How to guide - calculating clv (sample)How to guide - calculating clv (sample)
How to guide - calculating clv (sample)
Jesse Hopps
 
Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...
Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...
Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...
Zuora, Inc.
 
Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...
Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...
Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...
Daniel Oberes
 
Decoding the KPI Kaleidoscope with Sandfox Advisors
Decoding the KPI Kaleidoscope with Sandfox AdvisorsDecoding the KPI Kaleidoscope with Sandfox Advisors
Decoding the KPI Kaleidoscope with Sandfox Advisors
saastr
 
Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...
Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...
Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...
saastr
 
Summary_Cloud_economics.pdf
Summary_Cloud_economics.pdfSummary_Cloud_economics.pdf
Summary_Cloud_economics.pdf
AlexYuniarto1
 
Target Account Selection
Target Account SelectionTarget Account Selection
Target Account Selection
EverString
 
ON TARGET
ON TARGETON TARGET
How to prepare an insightful PPC report?
How to prepare an insightful PPC report?How to prepare an insightful PPC report?
How to prepare an insightful PPC report?
OnDem
 
Understanding the Financial Health of your Subscription Business
Understanding the Financial Health of your Subscription BusinessUnderstanding the Financial Health of your Subscription Business
Understanding the Financial Health of your Subscription Business
Totango
 
ABM Charter Template and Explanation
ABM Charter Template and ExplanationABM Charter Template and Explanation
ABM Charter Template and Explanation
Demandbase
 
Are You Making Tax Digital Ready?
Are You Making Tax Digital Ready?Are You Making Tax Digital Ready?
Are You Making Tax Digital Ready?
Nomisma Solution
 
Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...
Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...
Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...
Information Services Group (ISG)
 
EIA2019Italy - Financial Basics - Farhad Alessandro Mohammedi
EIA2019Italy - Financial Basics - Farhad Alessandro MohammediEIA2019Italy - Financial Basics - Farhad Alessandro Mohammedi
EIA2019Italy - Financial Basics - Farhad Alessandro Mohammedi
European Innovation Academy
 

Similar to SaaS Metrics: The Secret to Subscription Success (20)

Customer Retention Cost Report
Customer Retention Cost ReportCustomer Retention Cost Report
Customer Retention Cost Report
 
How to create and measure a recurring revenue business
How to create and measure a recurring revenue businessHow to create and measure a recurring revenue business
How to create and measure a recurring revenue business
 
Calculating Customer Lifetime Value How-To Guide
Calculating Customer Lifetime Value How-To GuideCalculating Customer Lifetime Value How-To Guide
Calculating Customer Lifetime Value How-To Guide
 
SaaS Metrics for Startups
SaaS Metrics for StartupsSaaS Metrics for Startups
SaaS Metrics for Startups
 
Account Planning in Salesforce: Trending in 2015
Account Planning in Salesforce:  Trending in 2015 Account Planning in Salesforce:  Trending in 2015
Account Planning in Salesforce: Trending in 2015
 
The key SaaS metrics that matter to smb owners
The key SaaS metrics that matter to smb ownersThe key SaaS metrics that matter to smb owners
The key SaaS metrics that matter to smb owners
 
How to guide - calculating clv (sample)
How to guide - calculating clv (sample)How to guide - calculating clv (sample)
How to guide - calculating clv (sample)
 
Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...
Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...
Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics...
 
Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...
Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...
Cross Functional Alignment Around the Customer: A Data Driven Approach to Cus...
 
Decoding the KPI Kaleidoscope with Sandfox Advisors
Decoding the KPI Kaleidoscope with Sandfox AdvisorsDecoding the KPI Kaleidoscope with Sandfox Advisors
Decoding the KPI Kaleidoscope with Sandfox Advisors
 
Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...
Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...
Where SaaS Stands Today: Benchmarks and Lessons from 17,479 SaaS Companies wi...
 
Summary_Cloud_economics.pdf
Summary_Cloud_economics.pdfSummary_Cloud_economics.pdf
Summary_Cloud_economics.pdf
 
Target Account Selection
Target Account SelectionTarget Account Selection
Target Account Selection
 
ON TARGET
ON TARGETON TARGET
ON TARGET
 
How to prepare an insightful PPC report?
How to prepare an insightful PPC report?How to prepare an insightful PPC report?
How to prepare an insightful PPC report?
 
Understanding the Financial Health of your Subscription Business
Understanding the Financial Health of your Subscription BusinessUnderstanding the Financial Health of your Subscription Business
Understanding the Financial Health of your Subscription Business
 
ABM Charter Template and Explanation
ABM Charter Template and ExplanationABM Charter Template and Explanation
ABM Charter Template and Explanation
 
Are You Making Tax Digital Ready?
Are You Making Tax Digital Ready?Are You Making Tax Digital Ready?
Are You Making Tax Digital Ready?
 
Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...
Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...
Governance Services: Meeting the Minimum Governance Table Stakes to Stay in t...
 
EIA2019Italy - Financial Basics - Farhad Alessandro Mohammedi
EIA2019Italy - Financial Basics - Farhad Alessandro MohammediEIA2019Italy - Financial Basics - Farhad Alessandro Mohammedi
EIA2019Italy - Financial Basics - Farhad Alessandro Mohammedi
 

Recently uploaded

Artificia Intellicence and XPath Extension Functions
Artificia Intellicence and XPath Extension FunctionsArtificia Intellicence and XPath Extension Functions
Artificia Intellicence and XPath Extension Functions
Octavian Nadolu
 
Webinar On-Demand: Using Flutter for Embedded
Webinar On-Demand: Using Flutter for EmbeddedWebinar On-Demand: Using Flutter for Embedded
Webinar On-Demand: Using Flutter for Embedded
ICS
 
DDS-Security 1.2 - What's New? Stronger security for long-running systems
DDS-Security 1.2 - What's New? Stronger security for long-running systemsDDS-Security 1.2 - What's New? Stronger security for long-running systems
DDS-Security 1.2 - What's New? Stronger security for long-running systems
Gerardo Pardo-Castellote
 
GOING AOT WITH GRAALVM FOR SPRING BOOT (SPRING IO)
GOING AOT WITH GRAALVM FOR  SPRING BOOT (SPRING IO)GOING AOT WITH GRAALVM FOR  SPRING BOOT (SPRING IO)
GOING AOT WITH GRAALVM FOR SPRING BOOT (SPRING IO)
Alina Yurenko
 
Atelier - Innover avec l’IA Générative et les graphes de connaissances
Atelier - Innover avec l’IA Générative et les graphes de connaissancesAtelier - Innover avec l’IA Générative et les graphes de connaissances
Atelier - Innover avec l’IA Générative et les graphes de connaissances
Neo4j
 
Using Xen Hypervisor for Functional Safety
Using Xen Hypervisor for Functional SafetyUsing Xen Hypervisor for Functional Safety
Using Xen Hypervisor for Functional Safety
Ayan Halder
 
Need for Speed: Removing speed bumps from your Symfony projects ⚡️
Need for Speed: Removing speed bumps from your Symfony projects ⚡️Need for Speed: Removing speed bumps from your Symfony projects ⚡️
Need for Speed: Removing speed bumps from your Symfony projects ⚡️
Łukasz Chruściel
 
GraphSummit Paris - The art of the possible with Graph Technology
GraphSummit Paris - The art of the possible with Graph TechnologyGraphSummit Paris - The art of the possible with Graph Technology
GraphSummit Paris - The art of the possible with Graph Technology
Neo4j
 
OpenMetadata Community Meeting - 5th June 2024
OpenMetadata Community Meeting - 5th June 2024OpenMetadata Community Meeting - 5th June 2024
OpenMetadata Community Meeting - 5th June 2024
OpenMetadata
 
KuberTENes Birthday Bash Guadalajara - Introducción a Argo CD
KuberTENes Birthday Bash Guadalajara - Introducción a Argo CDKuberTENes Birthday Bash Guadalajara - Introducción a Argo CD
KuberTENes Birthday Bash Guadalajara - Introducción a Argo CD
rodomar2
 
Orion Context Broker introduction 20240604
Orion Context Broker introduction 20240604Orion Context Broker introduction 20240604
Orion Context Broker introduction 20240604
Fermin Galan
 
APIs for Browser Automation (MoT Meetup 2024)
APIs for Browser Automation (MoT Meetup 2024)APIs for Browser Automation (MoT Meetup 2024)
APIs for Browser Automation (MoT Meetup 2024)
Boni García
 
Transform Your Communication with Cloud-Based IVR Solutions
Transform Your Communication with Cloud-Based IVR SolutionsTransform Your Communication with Cloud-Based IVR Solutions
Transform Your Communication with Cloud-Based IVR Solutions
TheSMSPoint
 
Empowering Growth with Best Software Development Company in Noida - Deuglo
Empowering Growth with Best Software  Development Company in Noida - DeugloEmpowering Growth with Best Software  Development Company in Noida - Deuglo
Empowering Growth with Best Software Development Company in Noida - Deuglo
Deuglo Infosystem Pvt Ltd
 
Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...
Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...
Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...
kalichargn70th171
 
A Study of Variable-Role-based Feature Enrichment in Neural Models of Code
A Study of Variable-Role-based Feature Enrichment in Neural Models of CodeA Study of Variable-Role-based Feature Enrichment in Neural Models of Code
A Study of Variable-Role-based Feature Enrichment in Neural Models of Code
Aftab Hussain
 
May Marketo Masterclass, London MUG May 22 2024.pdf
May Marketo Masterclass, London MUG May 22 2024.pdfMay Marketo Masterclass, London MUG May 22 2024.pdf
May Marketo Masterclass, London MUG May 22 2024.pdf
Adele Miller
 
Neo4j - Product Vision and Knowledge Graphs - GraphSummit Paris
Neo4j - Product Vision and Knowledge Graphs - GraphSummit ParisNeo4j - Product Vision and Knowledge Graphs - GraphSummit Paris
Neo4j - Product Vision and Knowledge Graphs - GraphSummit Paris
Neo4j
 
Automated software refactoring with OpenRewrite and Generative AI.pptx.pdf
Automated software refactoring with OpenRewrite and Generative AI.pptx.pdfAutomated software refactoring with OpenRewrite and Generative AI.pptx.pdf
Automated software refactoring with OpenRewrite and Generative AI.pptx.pdf
timtebeek1
 
Revolutionizing Visual Effects Mastering AI Face Swaps.pdf
Revolutionizing Visual Effects Mastering AI Face Swaps.pdfRevolutionizing Visual Effects Mastering AI Face Swaps.pdf
Revolutionizing Visual Effects Mastering AI Face Swaps.pdf
Undress Baby
 

Recently uploaded (20)

Artificia Intellicence and XPath Extension Functions
Artificia Intellicence and XPath Extension FunctionsArtificia Intellicence and XPath Extension Functions
Artificia Intellicence and XPath Extension Functions
 
Webinar On-Demand: Using Flutter for Embedded
Webinar On-Demand: Using Flutter for EmbeddedWebinar On-Demand: Using Flutter for Embedded
Webinar On-Demand: Using Flutter for Embedded
 
DDS-Security 1.2 - What's New? Stronger security for long-running systems
DDS-Security 1.2 - What's New? Stronger security for long-running systemsDDS-Security 1.2 - What's New? Stronger security for long-running systems
DDS-Security 1.2 - What's New? Stronger security for long-running systems
 
GOING AOT WITH GRAALVM FOR SPRING BOOT (SPRING IO)
GOING AOT WITH GRAALVM FOR  SPRING BOOT (SPRING IO)GOING AOT WITH GRAALVM FOR  SPRING BOOT (SPRING IO)
GOING AOT WITH GRAALVM FOR SPRING BOOT (SPRING IO)
 
Atelier - Innover avec l’IA Générative et les graphes de connaissances
Atelier - Innover avec l’IA Générative et les graphes de connaissancesAtelier - Innover avec l’IA Générative et les graphes de connaissances
Atelier - Innover avec l’IA Générative et les graphes de connaissances
 
Using Xen Hypervisor for Functional Safety
Using Xen Hypervisor for Functional SafetyUsing Xen Hypervisor for Functional Safety
Using Xen Hypervisor for Functional Safety
 
Need for Speed: Removing speed bumps from your Symfony projects ⚡️
Need for Speed: Removing speed bumps from your Symfony projects ⚡️Need for Speed: Removing speed bumps from your Symfony projects ⚡️
Need for Speed: Removing speed bumps from your Symfony projects ⚡️
 
GraphSummit Paris - The art of the possible with Graph Technology
GraphSummit Paris - The art of the possible with Graph TechnologyGraphSummit Paris - The art of the possible with Graph Technology
GraphSummit Paris - The art of the possible with Graph Technology
 
OpenMetadata Community Meeting - 5th June 2024
OpenMetadata Community Meeting - 5th June 2024OpenMetadata Community Meeting - 5th June 2024
OpenMetadata Community Meeting - 5th June 2024
 
KuberTENes Birthday Bash Guadalajara - Introducción a Argo CD
KuberTENes Birthday Bash Guadalajara - Introducción a Argo CDKuberTENes Birthday Bash Guadalajara - Introducción a Argo CD
KuberTENes Birthday Bash Guadalajara - Introducción a Argo CD
 
Orion Context Broker introduction 20240604
Orion Context Broker introduction 20240604Orion Context Broker introduction 20240604
Orion Context Broker introduction 20240604
 
APIs for Browser Automation (MoT Meetup 2024)
APIs for Browser Automation (MoT Meetup 2024)APIs for Browser Automation (MoT Meetup 2024)
APIs for Browser Automation (MoT Meetup 2024)
 
Transform Your Communication with Cloud-Based IVR Solutions
Transform Your Communication with Cloud-Based IVR SolutionsTransform Your Communication with Cloud-Based IVR Solutions
Transform Your Communication with Cloud-Based IVR Solutions
 
Empowering Growth with Best Software Development Company in Noida - Deuglo
Empowering Growth with Best Software  Development Company in Noida - DeugloEmpowering Growth with Best Software  Development Company in Noida - Deuglo
Empowering Growth with Best Software Development Company in Noida - Deuglo
 
Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...
Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...
Why Mobile App Regression Testing is Critical for Sustained Success_ A Detail...
 
A Study of Variable-Role-based Feature Enrichment in Neural Models of Code
A Study of Variable-Role-based Feature Enrichment in Neural Models of CodeA Study of Variable-Role-based Feature Enrichment in Neural Models of Code
A Study of Variable-Role-based Feature Enrichment in Neural Models of Code
 
May Marketo Masterclass, London MUG May 22 2024.pdf
May Marketo Masterclass, London MUG May 22 2024.pdfMay Marketo Masterclass, London MUG May 22 2024.pdf
May Marketo Masterclass, London MUG May 22 2024.pdf
 
Neo4j - Product Vision and Knowledge Graphs - GraphSummit Paris
Neo4j - Product Vision and Knowledge Graphs - GraphSummit ParisNeo4j - Product Vision and Knowledge Graphs - GraphSummit Paris
Neo4j - Product Vision and Knowledge Graphs - GraphSummit Paris
 
Automated software refactoring with OpenRewrite and Generative AI.pptx.pdf
Automated software refactoring with OpenRewrite and Generative AI.pptx.pdfAutomated software refactoring with OpenRewrite and Generative AI.pptx.pdf
Automated software refactoring with OpenRewrite and Generative AI.pptx.pdf
 
Revolutionizing Visual Effects Mastering AI Face Swaps.pdf
Revolutionizing Visual Effects Mastering AI Face Swaps.pdfRevolutionizing Visual Effects Mastering AI Face Swaps.pdf
Revolutionizing Visual Effects Mastering AI Face Swaps.pdf
 

SaaS Metrics: The Secret to Subscription Success

  • 1. An Introduction to SaaS Metrics & Churn: The Secret to Subscription Success chartmogul.com
  • 2. © 2015 Chartmogul Ltd We’re a SaaS business too. Here’s how we measure ourselves and update our investors Marketing Funnel Inside Sales SaaS Revenue Metrics Financials
  • 3. © 2015 Chartmogul Ltd KPIs We Care About (and you should too) Customers Monthly Recurring Revenue (MRR) Annual Recurring Revenue (ARR) Average Revenue Per Account (ARPA) MRR/Customer churn rate Customer Lifetime Value (LTV) Customer acquisition cost (CAC)
  • 4. © 2015 Chartmogul Ltd SaaS Revenue Metrics: • Differ from traditional accounting in that they are mostly interpreted forward projections • Don’t make standard financial reporting (gross/net revenue, etc) any less relevant • Are more relevant to the management team on a day-to-day basis.
  • 5. © 2015 Chartmogul Ltd Monthly Recurring Revenue (MRR) MRR is the backbone of any subscription business. “The amount of revenue you would generate next month if all customers are paying monthly and you had no new customers, cancellations, upgrade or downgrades.”
  • 6. © 2015 Chartmogul Ltd Breaking Down MRR Into “Movements” New business MRR - A lead that converts into a paid customer Expansion MRR - Any increase in the MRR of an existing customer Contraction MRR - Any decrease in MRR of an existing customer Churn MRR - Decreases in MRR from customer cancellations Reactivation MRR - Previously churned customers resubscribing
  • 7. © 2015 Chartmogul Ltd Customer Churn Rate (B2B) What is it? The rate at which you are losing customers through subscription cancellations. Calculation Segmentation is key to getting meaningful Churn metrics.
  • 8. © 2015 Chartmogul Ltd MRR Churn Rate (B2B) What is it? The rate at which you are losing revenue through subscription cancellations. Calculation Segmentation is key to getting meaningful Churn metrics.
  • 9. © 2015 Chartmogul Ltd Positive Churn vs. Negative Churn Many of the best known public SaaS companies have negative churn, e.g. New Relic, Zendesk, but not a requirement to be a unicorn, e.g. HubSpot. Image credits to Tomasz Tunguz :( :D
  • 10. © 2015 Chartmogul Ltd Churn Rate (B2C) A B2C formula Devin Brady (Recurly) wrote about a better way to calculate churn which we think is more useful for B2C companies (e.g. Netflix) Calculation Iterating through each day in the selected period (e.g. month/ quarter) we calculate as follows: SUM(1 - #_active_customers_at_end_of_day / #_active_customers_at_the_start_of_day)
  • 11. © 2015 Chartmogul Ltd Churn Recognition Best practice is to recognise churn at the end of the paid up billing period.
  • 12. © 2015 Chartmogul Ltd Churn classification Pro-active churn - Customer chose to cancel Passive churn - Customer didn’t update credit card Happy churn - Finished using your product (subset of pro-active churn) Churn that isn’t really churn - Money-back guarantees, etc. What is a reasonable level of Churn? Most SaaS companies selling to SMBs have quite high monthly churn (3-5%) The more up-market you go the lower the churn rate (usually) Many public SaaS companies have negative net churn, as high as 20%
  • 13. © 2015 Chartmogul Ltd Cohort Analysis - Identifying “Risky” Months Cohort analysis is the best way to truly understand how your subscriptions evolve over their lifespan. CustomerCohorts Months Since Signup
  • 14. © 2015 Chartmogul Ltd Customer Lifetime Value (LTV) What is it? An estimate of the total subscription value of an average customer. Calculation Helps with decisions on CAC spending, growth predictions. ARPA Customer churn LTV =
  • 15. © 2015 Chartmogul Ltd Customer Lifetime Value (LTV) This simple formula is a good starting point, but it doesn't take into account two important factors: 1. Churn doesn't occur linearly
 
 
 
 
 
 
 
 2. Many companies experience significant account expansion following an initial purchase. The blue line results in 10% less revenue over the same period.
  • 16. © 2015 Chartmogul Ltd Customer Lifetime Value (LTV) A Modular LTV Formula
  • 17. © 2015 Chartmogul Ltd Learn more from the leaders in SaaS thinking… Jason M. Lemkin @jasonlk saastr.com Christoph Janz @chrija theangelvc.net David Skok @BostonVC forentrepreneurs.com Tomasz Tunguz @ttunguz tomtunguz.com + chartmogul.com/blog
  • 18. © 2015 Chartmogul Ltd ChartMogul Loves SaaS Metrics
  • 19. The ChartMogul SaaS Cheat Sheet Trilogy © 2015 Chartmogul Ltd
  • 20. An Analysis of B2B SaaS Pricing Pages © 2015 Chartmogul Ltd
  • 21. Webinar – April 29, 2015 An Analysis of B2B SaaS Pricing Pages
  • 22. Even More Resources(!) • A Better Way to Calculate your Churn Rate • Ultimate SaaS Metrics Cheat Sheet • Ultimate Churn Metrics Cheat Sheet • Ultimate Cohort Analysis Cheat Sheet • Ultimate Guide to SaaS Customer Lifetime Value (LTV) • Why SaaS startups should aim for negative MRR churn © 2015 Chartmogul Ltd